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Should you opt for bankruptcy when you're in debt?

As someone who has worked long and hard, it is difficult to keep going when you realize that nothing you have done has brought down the amount of debt you have. You work to pay your minimums, but living paycheck to paycheck isn't easy.

Every time you believe you've started to get ahead, you realize that interest hits and you're back where you started. It's a cycle of payments and interest that never fully resolves. What can you do to help yourself in this situation?

Consider a Chapter 7 or 13 bankruptcy

There are two main forms of bankruptcy that may work for you. These include Chapter 7 and Chapter 13. If you make too much money to enter into a Chapter 7 bankruptcy, then a Chapter 13 is open to you.

What's the difference between Chapter 7 and 13 bankruptcies?

The repayment style is what is most different. Chapter 7 bankruptcy, or liquidation bankruptcy, requires you to give up some of your belongings based on the court's requests. Those are sold to pay back creditors, and then any remaining unsecured debts are forgiven. This is normally the kind of bankruptcy someone would take if they don't have enough money to make payments on their debts.

Chapter 13, on the other hand, is a repayment plan. You pay a certain amount of money each month for a period of three to five years. Once you do this without missing any payments, the remaining debts are forgiven and discharged.

Either of these kinds of bankruptcy can help you get out of debt and stabilize your finances.

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